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2014 (9) TMI 1185 - AT - Income TaxScrutiny under the CASS - CIT-A confirming that the assessment framed u/s 143(3) by the Additional Commissioner of Income Tax, Range III, Chandigarh is with proper jurisdiction - HELD THAT:- CIT(A) has correctly adjudicated the issue because in this case the case was selected on the basis of CASS which is also known as Computer Assisted Scrutiny System. Moreover, the case was selected for security on 2.9.2009 when a notice u/s 143(2) was issued whereas the instructions have been issued on 8.9.2010 and, therefore, they cannot apply to the earlier period. Once the case is selected for scrutiny under the CASS and notice is issued u/s 143(2) then whole of assessment is open for scrutiny. In any case the Ld. CIT(A) has correctly observed that this is an administrative matter and could have been objected to before the Commissioner in administrative capacity and cannot be challenged in the appeal, therefore, in our opinion no interference is required in the order of Ld. CIT(A). Disallowance u/s 40A(2)(b) - salary paid to wife of the assessee - Addition in view of the clubbing provisions of section 64(1)- AO observed that assessee was engaged in the advertising business and there was no evidence or any material on record to show that wife of the assessee was engaged in the English Copy writing and preparing the advertisement brochures - HELD THAT:- Assessing Officer has referred to the provision of section 40A(2)((b) initially but finally disallowance has been made u/s 64(1)(ii). This has been done because the assessee is running a business in his individual capacity and any remuneration paid to the wife is required to be clubbed with his income. Whether the income is clubbed or the expenditure is disallowed would amount to the same thing because net effect would be to the increase in the income of assessee. Further the Ld. CIT(A) has finally confirmed the disallowance by way of clubbing u/s 64(1)(ii) and we are concerned with the impugned order where reference has been made to section 64(i)(ii) of the Act and no cognizance can be taken for the reference made by Assessing Officer to section 40A(2)(b). Contention as raised by the assessee that the similar expenditure has been allowed in the earlier years even under the scrutiny assessment completed for assessment year 2007-08 is not acceptable because in the case of CIT v British Paints India Ltd [1990 (12) TMI 2 - SUPREME COURT] it is incorrect to say, as contended on behalf of the assessee, that the officer is bound to accept the system of accounting regularly employed by the assessee the correctness of which had not been questioned in the past. There is no estoppel in these matters and the officer is not bound by the method followed in the earlier years - there cannot be any estoppel if earlier a wrong proposition was accepted by the Assessing Officer against the clear provision of law. This is so because an error cannot be allowed to be perpetuate forever. Difference in the sales - no entry for rebate has been made - HELD THAT:- Assessee has credited the account of Glass Palace with individual entries for rebates allowed e.g. against the bill of ₹ 22,244/- as rebate of ₹ 1,747/- is credited but no entry for rebate has been made by M/s Glass Palace. Thus, it becomes clear that M/s Glass Palace has made only one entry at the end of year towards rebates allowed to them through the year which also include adjustments on account of furniture. Similarly, in the of M/s Healthway, perusal of account would show that they have taken credit of total rebate amounting to ₹ 18,37,300/- whereas the assessee has allowed rebates only up to ₹ 16,45,654/-. If other party debits account with more debit without the consent of the assessee then assessee could not be blamed. Therefore, reading of the various entries clearly show that account was duly reconciled and whatever difference is there stand duly explained, therefore, there is no justification in this addition Addition u/s 40A - Cash payment - as submitted that payments were made in various installments for purchase of festival gifts - as per CIT-A even if the payment was made in installments, the same was covered by the provisions of section 40A(3) - disallowance of interest u/s 40A(3) could be made for any payment in cash in excess of ₹ 20,000/-. However, the provision did not contain the expression “aggregate of payment” and Hon'ble Orissa High Court has held that in the case of CIT v Aloo Supply Co. [1979 (12) TMI 60 - ORISSA HIGH COURT] that if payments were made at various points of time in a particular day but less than ₹ 2,500/- (as applicable in the relevant year which was later changed to ₹ 20,000/-) then provisions of section 40A(3) was not attracted. Addition u/s 68 or 69A - assessee deposited cash in excess of ₹ 10 lakhs in the year under consideration - as per CIT-A addition could not made u/s 68 and made the addition u/s 69A - HELD THAT:- Assessing Officer had information that assessee had deposited certain sums in a bank account and assessee was duly confronted with this information but assessee had no explanation and that is why the addition was made. Merely because the bank pass book cannot be treated as books of account on the basis of certain decisions does not mean that addition is not protected u/s 292B and has been rightly confirmed by the Ld. CIT(A) u/s 69A of the Act. CIT(A) has plenary powers and the scope of the powers to be co-terminus with that of Income Tax officer. Therefore, he can do whatever can be done by the Assessing Officer. The Ld. CIT(A) under these powers has correctly upheld the addition under the correct provisions. Assessing Officer clearly found that assessee had deposited cash for which assessee had no explanation and that is why addition was made. CIT(A) has not discovered anything new except that he agreed with the contention that addition could not made u/s 68 and made the addition u/s 69A of the Act. Thus we find nothing wrong with the order of Ld. CIT(A) and confirm the same.
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